SESAC radio rates go down after arbitration, though fuels argument against the US rate courts

US collecting society SESAC yesterday confirmed that new royalty rates had been agreed with the American radio industry via an arbitration process. The bad news is that the rates radio stations will pay the performing rights organisation have gone down by around 60%. But the good news is that the society is still getting rates 50% higher than rival PRO ASCAP.

There are four collecting societies representing the performing rights in songs in the US – two big ones, BMI and ASCAP, and two smaller ones, SESAC and Global Music Rights.

The big two are regulated by the pesky consent decrees, agreements with the US Department Of Justice designed to overcome the competition law concerns of collective licensing. SESAC is not governed by consent decree, but did agree to accept independent arbitration on rate setting with the Radio Music License Committee, partly in a bid to stop the radio industry pushing for government regulation in line with ASCAP and BMI.

SESAC having agreed to that independent arbitration in 2015, it was expected that the rates the society could demand from radio would go down. However, the SESAC rate is still significantly higher than that secured by ASCAP last year, which was a voluntary agreement, but one reached under the threat that the RMLC would take the matter to the rate court that is empowered to set rates by the society’s consent decree.

Many in the music community argue that the rate courts repeatedly set the royalties paid to BMI and ASCAP members at below true market rates. And SESAC reckons that its new deal with the US radio sector, set by independent arbitrators, proves that argument. Which could help BMI in its ongoing battle with the RMLC over future rates. And Global Music Rights, which is currently fighting RMLC over whether or not to involve independent arbitrators in its licensing negotiations at all.

Says SESAC boss John Josephson: “While we believe that the value of our music substantially exceeds the amount of the award and the nature of the arbitration process made it inevitable that we would see a reduction in our fees for terrestrial radio, the panel’s decision is a resounding affirmation of the fact that ASCAP rates in radio do not reflect fair market value”.

He went on: “We are pleased to create a benchmark that we hope will benefit all songwriters and publishers. Songwriters are amongst the most heavily-regulated small businesspeople in the United States, and this agreement marks an important step in SESAC’s ongoing effort to assure that they receive fair compensation for their works”.

And hurrah for that. And hurrah for Adele, the latest artist to shift her performing rights Stateside over to SESAC. Her prize is less radio money but also more radio money. Super.